Archives

BC Hydro, the next steps

I’m disappointed in the provincial government’s decision to continue Site C. It is not the choice I would have made, were I in a position of influence.

However, I understand it. Financial issues interconnect.

Finance ministry people influenced the Site C decision, emphasizing that what is done today affects what can be done tomorrow. A $4 billion dollar write-off would reduce the province’s credit rating and elevate annual costs by hundreds of millions.

Christy Clark vowed to get Site C past the point of no return. She succeeded.

Perhaps, this is one of the few successes in the political career that special interests hired her to pursue.

However, Mr. Horgan must know there are even more serious problems to address at BC Hydro.

People with influence have been treating the utility as an always-open ATM. This is not only demonstrated by payments to independent power producers – $481 million more in the first six months of the current fiscal year than in the comparable period twelve years ago, despite no growth in demand – but also to the contractors who’ve grown fat as BC Hydro added $20 billion to its assets.

This situation should amaze everyone. It would be headlined in corporate media, if they cared about people of the province.

How does a utility pay $20 billion for additional assets, move its purchases of private power in the first half of fiscal year 2005 from $219 million to $710 million in the first half of fiscal year 2017,

AND…

deliver 2% less power to BC consumers in the current period?

The government must reclaim management of BC Hydro from the Liberal pirates that have been in charge.

This chart illustrates my argument.

Our public utility delivers (or, but for IPPs, could deliver) electricity from generating facilities built years ago. But, it continues spending massive sums to add assets, without economic justification.

Profligacy allows the recipients of spending to gain but adds significant amounts to every utility bill issued by BC Hydro.

Politicially privileged people gain; ordinary ratepayers lose.

Directors of BC Hydro, drawn mostly from Liberal contributors and supporters, failed to protect citizens of BC. They turned blind eyes as the utility was pillaged.

The immediate action should be to replace every director remaining from days of Liberal governance. The new people should be committed to protecting the public interest.

Like this:

Related

Post navigation

Hi Norm,
I don’t trust John to change anything. Yes, faith shattered. I’ll continue to donate to First Nations but never again to the NDP. The look on Mungall and Horgan’s face on Monday was as telling as a polygraph test.

Hi Norm,
There seems to be some disagreement over whether Site C “Sunk Costs” need to be booked immediately or whether they can be written off over several years. The NDP wants us to believe the sunk costs need to be booked immediately and this would destroy the government’s finances. However, Robert McCullough and Harry Swain take the position there are precedents to write off sunk costs over several years with a net savings to rate payers. Who is right? I have included links to Robert McCullough & Harry Swains comments below.

I understand. I think both Horgan and Mungall had serious trouble with this decision. They chose differently than we might have done, but they’ve been given authority by voters. I think that now we must try to convince them to improve the governance of BC Hydro.

Liberals established the corrupt situation so NDP and Green MLAs must ensure correction.

I’m similarly puzzled by the p*****g match between the pro- and anti-Site C economists on this issue. And just today, Marc Eliesen, former Hydro CEO, weighed in again, and dumped all over the idea that an immediate write-off was necessary:
“The cost of cancelling Site C can readily be managed without affecting the provincial budget or imposing price hikes on ratepayers. Even Horgan’s briefing notes explain that the $4-billion cost of cancelling the project and remediating the site can be written off in B.C. Hydro’s accounts over 70 years — as it should be. There would be no rate shocks, increased burden on the province’s debt or negative impact on social programs.”
( http://www.timescolonist.com/opinion/op-ed/comment-site-c-continues-on-premier-s-faulty-arguments-1.23121222 )
It would be great to see those briefing notes, because that’s not the line that Horgan et al. are putting out.
Clearly, the entire caucus has drunk the same Koolaid. But it’s hard not to wonder who actually gave this “devastating” (as Eby termed it) advice sometime last month – Liberal holdovers in Finance / Energy?
Certainly, Eliesen is a difficult critic for the gov’t to dismiss, as he’s pretty much the epitome of NDP bureaucratic royalty, moving from province to province to run the electrical utility whenever they’ve won an election (ON, MB, BC).

I think politcs in it’s guise now won’t survive this for long as a place to look for leadership.
Barely has any respect now.
No critical thinking is happening here to approve Site C and but then it isn’t even taught in school as an essential skill. Like How do Banks work?
In listening to Horgan’s speech it was about the social services the income generated from Site C was to bring and the speeck lacked any imagination on how to reduce the costs of stopping the project.
We need a future and at least we’re going somewhere was the sentiment I heard.
No visionaires about. No Brains around in the social office?
No thinkers in the realm at the social level whom we elect.
More an idealism approach akin to religious thought in it’s practical usefulness for real problems.No offense to the spiritual inclined.
We are in serious trouble and our respect for politics will pay a steep price.
I don’t think Site C is going away following on the heels of the BCFerries fiasco sham of business model, BCRail corruption scandal etc.
It will be entertaining to observe what will happen when the truth of going ahead becomes apparant.
Where’s the Green Party in this ?
Perhaps it will be the Liberal Opposition who will be voted into power by critizing the mess the NDP made of Site C.
Do you get my drift?
Hugh
who listens to the wilds wind sweeping about us.

BC’s Auditor General has three audits planned that involve BC Hydro: BC Utilities Commission Oversight, Rate-regulated Accounting at BC Hydro, and Site C.

But what’s really needed is an immediate forensic audit of the independent power program.

Mr. Horgan just made a very tough decision on Site C. It wasn’t the garden-variety type of “tough decision” his two immediate predecessors liked to brag about; usually involving cutting or foregoing programs for the disadvantaged while rewarding their supporters. You could hear it in his voice and see it in his demeanor. He weighed it heavily, and it weighed heavily on him.

Calling in the forensic auditors should in comparison be a piece of cake.

Good article. It is looking more and more like our freshly minted premier wasn’t being entirely truthful with the citizens of BC when he declared the $4 billion sunk costs of Site C would have to be booked immediately if the decision was made to cancel Site C. According to Horgan this would destroy the provinces finances and result in new programs being delayed. Along with Eoin Finn, Robert McCullough & Harry Swain have also come out publicly stating that the sunk costs can be amortized over as many years as you want lowering the impact to ratepayers. I think the province has made a huge mistake on this one that future generations will end up paying for.

I feel cheated and very disappointed by John Horgan’s decision. There must be some political backroom blackmail going on. The figures don’t add up to the 10% immediate rate hike and Triple A credit rating downgrade – we have been threatened with if the Site C was cancelled.
Couldn’t the Dam have been balanced with green energy from wind, solar, geothermal and possibly local natural gas to produce the temporary shortage of energy … if there is a shortage? The entire site could be restored for under $100 million … yet we will now have to pay $500 million annually, to finance the $12 billion debt for power we don’t need.
We keep hearing there is a glut of electricity yet we are dumping electricity at a loss. Also, we are paying IPP’s to “not produce power, as it is not required”.
The $470 million mobile camp could be sold and relocated in areas that need affordable housing. The 2200 workers that they claim will be lost, could go and apply for the 60,000 job opportunities that now presently unfilled in BC.

I think a popular toy in BC this Christmas would be a Christy Clark Doll that sits in an Electric Chair. Just plug it in … Her smile lights up the whole room, it tells an endless string of lies and asks for cash donations. It is guaranteed to triple your monthly Hydro Bill and after it quits working, it hides.
(The Guarantee:There is no money back so there is no point to return.)
There might be some personal cult satisfaction by “sticking the Doll with pins” while chanting “all BC Hydro Directors and executives must be fired!”
In January 2018, the BC taxpayers and voters should demand the NDP be damned for continuing the Dam.

So where will this debt go when site C eventually becomes a stranded asset? The rate at which alternate energies are evolving, and storage and production costs are becoming cheaper and cheaper, is amazing. With no LNG industry in sight ( thankfully) and all the wretched ipp’s getting their shares first, what and who will buy this electricity?
I still say it should have become a destination research facility for alternate energies and agriculture. Then it would have shown as a provincial asset on the books.

Hope there is a very special place in hell for Christy and her cohorts.

Hi Norm, I wonder if you’ve looked closely at the Sept budget update. This is a link to the backgrounder which has all the highlights: http://bcbudget.gov.bc.ca/2017_Sept_Update/aria/2017_Sept_Update_backgrounder1.htm
You’ll note total revenues at about $53 billion with predicted growth of just under 3% and allowances and contingencies accounts of more than $500 million in each of the next four years. I understand the situation for Hydro debt but I can’t see the short term problem with paying off the costs of shutdown as being critical. The province is experiencing growth, employment is virtually full and they’re forecasting a significant surplus this year. What kind of advice did they get which told them to light their hair on fire? It makes no sense to me – but you’re the financial guy – what’s your take – I just can’t see this being a problem for credit rating agencies?

Norm, like you, I was very disappointed with the decision to proceed with Site C. Last week, I wrote to a cabinet minister whom I know well and urged the NDP to cancel site C. But I can understand why Premier Horgan made the decision that he did because the province could not absorb the financial hit. There are tons of other problems inherited from the Liberal government which will not be possible to address and resolve had site C been cancelled.

Mazooki. I don’t think we were getting the truth from Mr. Horgan when he justified proceeding with the dam. Several prominent people such as Harry Swain, Robert McCullough and Eoin Finn have come out against the NDP’s rationale to proceed. See my comments above for web links. We have been fed a bunch of BS.

I should also add that Rob Botterell’s email to Eby and Heyman is posted in the comments on the Tyee story by Nikiforuk – As well as the statement of Robert McCullough on the ‘financing’ claims Horgan made. I did try to email you that info as well but you may not have gotten it. Let me know if you haven’t managed to access them.

Mark Ellison, former CEO of BC Hydro, was just interviewed on CKNW’s Jon McComb show and basically he shredded Horgan’s rationale that they had no choice but to proceed with Site C because the government books could not absorb the $4 billion sunk cost hit. Several other prominent people such as Harry Swain, Robert McCullough and Eoin Finn have also come out against the NDP’s rationale to proceed. See my comments above for links. The Mark Ellison interview can be listened to on the CKNW Audio Vault – it begins at approx 7:37 AM Dec 15. It is looking more and more like the NDP are not any different than the Liberals when it comes to feeding the population a bunch of BS to justify unnecessary pet projects.

“(BC) Government has fostered a robust independent power sector in British Columbia with the 2002 and 2007 Energy Plans which stated the private sector will develop new electricity generation facilities, while BC Hydro continues to upgrade and expand existing infrastructure and with government’s approval, is constructing Site C (now up to $10.7 billion). Additionally, the Minister of Energy and Mines’ 2015 Mandate Letter states government will continue working with BC Hydro and Clean Energy B.C. to identify further opportunities for private clean energy producers in British Columbia.”

…..

Signed:

Bill Bennett, Minister of Energy and Mines

Jessica McDonald, President and CEO, BC Hydro

Paul Kariya, Executive Director, Clean Energy B.C.

Then we have Premier Horgan on Jon McComb saying recently that Site C will allow capacity for more IPP power.

Mr. Horgan announced to the citizens of this province that his decision to reluctantly proceed with Site C completion was solely due to the financial harm that would immediately impact other planned government programs should the project be terminated. Several very credible experts have since demolished the financial foundation for the decision proffered by Mr. Horgan.

It is very apparent that he must now step back up to the podium and counter the information provided by those experts or he will hear his credibility questioned for as long as the project continues. The questions won’t come from the BC Liberals or their supporters, who are happy to see him twisting; they will come from a significant segment of his own base, which wants to know where he got the information he relied upon to excuse what it considers a betrayal.

“Cabinet ministers in any new government quickly learn they know very little about the ministry they’ve been handed, and deputy ministers and their assistant deputies are very happy to drive home the point. They not only have the expertise and corporate knowledge to run the ministry’s day-to-day operations, but the ability to make or break the minister and/or the minister’s government. It takes some time for any new minister, no matter how otherwise capable, to put her or his own stamp on the ministry. Some never do, and the DMs and ADMs run the show.

It takes a very strong minister, supported by the premier and the executive council, to come into office and completely change the direction of a ministry staffed and molded for a decade and a half by a different political philosophy. Especially if that change requires removal of DM and ADM incumbents who can use their corporate knowledge to advantage when resisting change. The normal process eventually produces winners and losers; evident to the public by cabinet member demotions or shuffles, and /or public service reassignments.

The problem we have now is that there are some major decisions beyond the day-to-day operation of certain ministries that will affect the province forever and that have to be made immediately. They can’t wait for certain ministers or indeed the entire executive council to get comfortable. And there is increasing evidence, including the decision on Site C, that in several ministries the deputies are operating as if the BC Liberals are still in office.

Mr. Horgan should ask himself what he’s going to do about that. Because depending on his government’s performance, voters will be asking the same question.”

Hi Lew,
your insightful comment nail it. I think John Horgan is a good man but this Site C decision is 100% wrong. He, and the NDP Cabinet, are getting played by the same-old corporate interests/bureaucrats and short-term thiking.

We are about to hit the environmental *wall* and the capitalist neo-liberal model need to be ditched *now* if we have any hope of saving the planet.

It’s clear that Christy Clark’s senior public service is substantially intact, and that explains a lot about the decision-making on this project. All but 2 of the 28 DMs were already at the DM or ADM rank prior to the election, and this includes everyone in the Ministries that would have likely had a big role in the Cabinet’s Site C discussions. For example, one of the DMs behind the mid-November letter to BCUC, Dave Nikolejsin, had served in the same role for the Liberals in 2013-2015. His next posting before the election was two years as Deputy Minister of Natural Gas Development. So the guy who runs the nuts-and-bolts of Michelle Mungall’s Ministry previously spent a couple of years trying to keep the LNG fantasy alive.

What If:
Imagine if the Marionettes we call politicians were bought by BC Hydro. All of the politicians’s campaign debts would be paid and a gurantee of re-election included.
What if, … The real intention of Site C is not electricity but a huge water source to supply California’s needs for irrigation, drinking water and fire fighting.
President “Bozo” would think this is a good deal for America as NAFTA disintegrates.

What if, … our Triple A Credit Rating remained the same and did not produce an immediate 10% rate increase if Site C was stopped?
What if, … completing the Site C Dam actually costs $20 Billion, and BC could not even give away the electricity?

What if, … the NDP caucus had but one Christmas wish?
(That would be to persue what the voters were promised the NDP would do.)

NDP Cacus, wake up and speak up against Site C if you hope to be believed and re-elected.

“What If:
Imagine if the Marionettes we call politicians were bought by BC Hydro. All of the politicians’s campaign debts would be paid and a gurantee of re-election included.
What if, … The real intention of Site C is not electricity but a huge water source to supply California’s needs for irrigation, drinking water and fire fighting.
President “Bozo” would think this is a good deal for America as NAFTA disintegrates.

What if, … our Triple A Credit Rating remained the same and did not produce an immediate 10% rate increase if Site C was stopped?
What if, … completing the Site C Dam actually costs $20 Billion, and BC could not even give away the electricity?

What if, … the NDP caucus had but one Christmas wish?
(That would be to persue what the voters were promised the NDP would do.)

NDP Cacus, wake up and speak up against Site C if you hope to be believed and re-elected.”

*What if* everything you suggest was first conceived of over 60 years ago, and even given an acronym? (NAWAPA)

After the shell shock of hearing about the continuation of Site C I am still a very disappointed reader, voter and member of the NDP. I thought we were finished with the BS sent out to the voters and citizens of this province over the last 16 years!!?? I wish politicians would have the balls to tell it straight…is this a jobs issue? vote grabber issue? something we know nothing about issue? (deals made at the top levels provincial or federally). it certainly isn’t about safe guarding farmland, respecting FN or environmental issues….or am totally naive??? I, also, can’t buy the money issue.
Do I shake my head and let this go away and hope there’s better days/weeks/months ahead and policies will be more to my liking….I was fit to be tied at the direction of the BC Liberals and the corruption they spewd……..I hope the NDP under Horgan will be different. Other then Site C I have supported the direction the NDP has taken…….maybe 2018 will show things are headed in the right policy direction?
This rant has released some of my frustration

The quote below is from one of the backgrounder documents in the Govt news release about Site C:https://news.gov.bc.ca/releases/2017PREM0135-002039
“In 2002, the previous government introduced the Energy Plan that mandated that all new power generation opportunities were reserved for private power producers. Through the extensive use of electricity purchase agreements, the board of BC Hydro made long-term commitments to purchase a large supply of new intermittent power, primarily through run-of-river power projects, at prices considerably higher than produced by BC Hydro’s heritage hydroelectric assets.
The board of BC Hydro committed to more than 135 contracts with an average term of 28 years. And while power generated by BC Hydro’s heritage assets cost $32 per MWh, power from IPPs cost $100 per MWh. Today these contracts represent future financial commitments of over $50 billion.
The Energy Plan also changed the structure of BC Hydro and established a standalone BC Transmission Corporation to allow private power producers to access the transmission system and to sell directly to large consumers.
At the same time that BC Hydro was directed to accommodate this new supply of intermittent power, the previous government also instructed BC Hydro to decommission its Burrard Generating Station in Metro Vancouver to address growing concerns about local air pollution and greenhouse gas emissions.
As BC Hydro lost needed electrical capacity to backstop its new intermittent power supply, it was forced to seek new capacity or “firm” power, the type traditionally provided by hydroelectric facilities like Site C.
In 2010, the old government introduced the Clean Energy Act, which exempted a number of BC Hydro projects and power procurement activities from independent review by the BC Utilities Commission including Site C, the Clean Power Call, the Smart Metering Program and the Northwest Transmission Line.”
……….
“As a result of these earlier policy decisions, the old government saddled BC Hydro with a new supply of long-term expensive intermittent power, without the electrical capacity to maintain reliable service to its customers.
Faced with challenges of its own making, the old government decided to push ahead with Site C without allowing review by British Columbia’s independent regulator, the BC Utilities Commission.”

Sadly, Mr. Horgan and his NDP government have betrayed the voters and the citizens of this province. He and his party can no longer be taken at their word. This decision was based purely on politics and not on fiscal or environmental facts. Our only hope now is that the Aboriginal court battles that we MUST support now is successful in halting this travesty.

Interesting, per Harold Steeves (former NDPer) that “renewables are a threat to Site C.” – That switching will leave a stranded asset for the poor to pay off (forcing the gov’t to subsidize hydro) as the ones who can afford to switch to solar etc. will.
BUT, otoh we’ll subsidize EV’s to try to drive up demand for site C??
Is this decision part of the framework of FERC/NERC? to fragment or destroy energy monopolies in order to “open competition” for potentially competitive rates that would lower the cost for all of us?
Or maybe renewables are a scam – how else do you explain constructing 3 (4?) huge dam projects across Canada? Look at Ontario – are we going to see “global adjustment” charges and “debt retirement” charges on our monthly hydro bills next?

“But that’s only seven years. How about two decades? B.C. was home to 3.9 million residents in 1996, there were 1.5 million households across the province, GDP had hit $139.9 billion, and we consumed 64,664 gigawatt-hours of electricity.

By 2016, B.C.’s population had grown to 4.75 million, there were 468,000 more households, GDP had risen to $240.8 billion, and we consumed 1,713 less gigawatt-hours.

It wasn’t a rogue year. In 15 of the last 20 years, we’ve used less electricity than we did in 1996.”

It appears that BC is dying due to “death by a thousand cuts.” Justin Trudeau is dancing around the world with photo ops lecturing others on Human Rights … yet China does not wish to hear his message …
Neither does Trump, Putin or Iraq as they have their own energy agendas.

Trudeau and Horgan have sold their Souls, the family farm, Intelligence, Education, technology companies, Site C, Retirement Concepts and BC real estate to the Chinese Government. The Chinese Government will have the rights to profit above the environmental costs, to ignore Human Rights, to sue Canadians and supply the labour.

It is a new form of Drive -In Take Out. Good luck trying to get a fair deal for Canada.

The Kindermorgan pipeline now has huge Chinese investment. Next , BC Ports and Terminals will be up for auction.

The only thing left to give away is our Drinking water. Can Nestles be bought by the Chinese?

Wasting money on destructive energy projects makes zero sense when there are better alternatives. British Columbia is spending billions on Site C. It could suspend the project today and have less harmful and cheaper sources of clean power operational by the time more electricity is needed.

As is typical of resource management, the regulating ministry sees its prime purpose is to enhance growth and profitability of companies extracting resources. the public share of produced values is no longer material. This cozy relationship costs taxpayers billions of dollars, money that could be spent on renewable energy, transit, daycare, education or many […]

Canada’s Conservatives are committed to the Republican Party value of opposing voter fraud, if someone else is doing it. Like their American mentors, HarperCons protest electoral manipulations even more strongly when no one is doing it. Bill C-76 amends the Canada Elections Act to establish spending limits for third parties and political parties before of a […]

Freelance reporter Bob Mackin wrote that BC’s Legislature was a scandal waiting to happen and he quoted journalism professor and former Legislative reporter Sean Holman about the significant potential for abuse. Mackin blames excessive secrecy and lack of transparency...

BC Hydro's quarterly report for the period ended September 30, 2018 shows the utility is very good at some things. Specifically, borrowing and spending money. In the thirteen years from 2005, assets employed to service BC consumers have almost tripled in value. Trouble is, actual sales to residential, commercial and industrial consumers are less in 2018 […]

The case is clear. British Columbia's Government decided to reduce the public share of natural gas revenues to almost nothing. This is despite substantial growth in the quantities of natural gas being extracted.

Perhaps an even more vile set of falsehoods is BC Hydro's continuing claims that demand for electricity by its BC consumers has been growing steadily. That has led to excessive capital spending that measures in the billions.

Check out the fine work on electoral reform by Merv Adey 2018 fellowship recipient Andrew Seal. It’s a fabulous five part series published by The Tyee. We’d like to raise additional funds to initiate the next fellowship. You can be sure it will support a comprehensive examination of a subject important to all British Columbians.